Lincoln Statistical Report




                                                                           2006

The financ...
Lincoln Financial Group
                                            Statistical Report
                                   ...
LFG Analyst Coverage
                                  Fourth Quarter, 2006


                                            ...
12/31/2006                                                                                                                ...
12/31/2006                                                                                                                ...
12/31/2006                                                                                                                ...
12/31/2006                                                                                                                ...
12/31/2006                                                                                                                ...
12/31/2006                                                                                                                ...
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
lincoln national stat4q06
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lincoln national stat4q06

  1. 1. Lincoln Statistical Report 2006 The financial data in this document is dated February 6, 2007 and has not been updated since that date. LNC does not intend to update this document.
  2. 2. Lincoln Financial Group Statistical Report Fourth Quarter 2006 Table of Contents LFG Analyst Coverage Notes Financial Highlights 1-4 Consolidated Expense Detail 5 Operating Results Summary 6 Consolidated Statements of Income 7 Consolidating Statements of Income from Operations 8-11 Consolidated Balance Sheet 12 Balance Sheet Data - Segment Highlights 13 Individual Markets Individual Life Insurance Income Statements & Operational Data 14 Operational Data 15 Account Value Roll Forward 16 Individual Annuities Income Statements & Operational Data 17 Account Value Roll Forward 18 Account Values 19 Employer Markets Defined Contribution Income Statements & Operational Data 20 Account Value Roll Forward 21 Supplemental Data 22 Executive Benefits Income Statements & Operational Data 23 Account Value Roll Forward and Supplemental Data 24 Group Protection Income Statements & Operational Data 25 Supplemental Data 26 Investment Management Income Statements 27 Assets Under Management Roll Forward 28 Lincoln UK Income Statements 29 Operational Data 30 Lincoln Financial Media 31 Other Operations 31 Domestic Deposits / Account Balances / Net Flows 32 Investment Data Assets Managed 33 Other Investment Data 34
  3. 3. LFG Analyst Coverage Fourth Quarter, 2006 PHONE NUMBER ANALYST FIRM Jeff Hopson 314-955-2639 A.G. Edwards Tamara Kravec 212-583-8212 Banc of America Securities Saul Martinez 212-272-3528 Bear Stearns Suneet Kamath 212-756-4587 Bernstein Colin Devine 212-816-1682 Citigroup Tom Gallagher 212-538-2010 Credit Suisse Darin Arita 212-250-7321 Deutsche Bank Jason Zucker 212-857-6146 Fox-Pitt Kelton Joan Zief 212-902-6778 Goldman Sachs & Company Jimmy Bhullar 212-622-6397 JP Morgan Jeff Schuman 860-722-5902 Keefe, Bruyette & Woods, Inc. Bob Glasspiegel 860-724-1203 Langen McAlenney Eric Berg 212-526-2805 Lehman Brothers Ed Spehar 212-449-4245 Merrill Lynch Nigel Dally 212-761-6235 Morgan Stanley Steven Schwartz 312-612-7686 Raymond James & Associates Inc. David Lewis 404-926-5097 SunTrust Robinson Humphrey Andrew Kligerman 212-713-2492 UBS John Hall 212-214-8032 Wachovia Investor inquiries may be directed to: Jim Sjoreen, Vice President, Investor Relations Email: jsjoreen@lfg.com Voice: (215) 448-1420 Fax: (215) 448-3962 Note: This list is provided for informational purposes only. LFG does not endorse the analyses, conclusions, or recommendations contained in any report issued by these or any other analysts. ** Statistical data will be available immediately after the release of earnings for each quarter through LNC’s Investor Relations Web site http://www.lfg.com/investor
  4. 4. 12/31/2006 ii NOTES On April 3, 2006, LNC completed its previously announced merger with Jefferson Pilot Corporation (quot;JPquot;). Beginning with the second quarter of 2006, we are reporting results through the following segments: Individual Markets - Annuities, Individual Markets - Life Insurance, Employer Markets - Retirement Products, Employer Markets - Group Protection, Investment Management, Lincoln UK and Lincoln Financial Media. Historical information presented in this report has been restated to reflect the new organizational structure. As described below, certain reclassifications have been made to historically reported items to reflect the new reporting practices of LNC. Definitions and Presentation quot;Income from Operations,quot; quot;Operating Revenue,quot; quot;Return on Capital,quot; and quot;Station Operating Incomequot; are non-GAAP financial measures and do not replace GAAP revenue and net income (loss). Detailed reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure are included in this statistical supplement. We exclude the after-tax effects of the following items from GAAP net income to arrive at income from * operations: * Realized gains and losses on investments and derivatives, * Gains and losses related to reinsurance embedded derivatives/trading account securities, * The cumulative effect of accounting changes, * Reserve changes on business sold through reinsurance net of related deferred gain amortization, * Gains and losses on the sale of subsidiaries and blocks of business, and * Loss on early retirement of debt, including subordinated debt NOTE: Income from operations is lower than previously reported as it now includes restructuring charges previously excluded in the determination of income from operations * Operating revenue represents revenue excluding the following, as applicable: * Realized gains or losses on investments and derivatives, * Gains and losses related to reinsurance embedded derivatives/trading account securities, * Gains and losses on the sale of subsidiaries and blocks of business, and * Deferred gain amortization related to reserve changes on business sold through reinsurance Return on capital measures the effectiveness of LNC' use of its total capital, which includes equity (excluding accumulated s * other comprehensive income), debt, capital securities and junior subordinated debentures issued to affiliated trusts. Return on capital is calculated by dividing annualized income from operations (after adding back interest expense) by average capital. The difference between return on capital and return on shareholders' equity represents the effect of leveraging on LNC' consolidated results. s Station operating income is calculated as communications revenues less operating costs and expenses before depreciation * and amortization. Income from operations, operating revenue, return on capital, and station operating income are internal measures used by LNC in the management of its operations. Management believes that these performance measures explain the results of operations of LNC' ongoing operations in a s manner that allows for a better understanding of the underlying trends in LNC' current business because the excluded items are either s unpredictable and/or not related to decisions regarding the underlying businesses. Certain operating and statistical measures are included in this report to provide supplemental data regarding the * performance of LNC’s current business. These measures include deposits, sales, net flows, first year premium, inforce, spreads, and assets under management. * Sales as reported consist of the following: * Universal life (quot;ULquot;), including Moneyguard, and COLI - first year commissionable premium plus 5% of excess premium received, including UL internal replacements * Whole life and term - first year paid premium * Annuity - deposits from new and existing customers * Group Protection - annualized first year premium from new policies * Investment Management Retail Sales and Institutional Inflows - contributions, transfer in kind purchases, and reinvested dividends for new and existing accounts. Reclassifications Certain reclassifications have been made in the historical presentation of certain revenue and expense items. The principal reclassifications consist of the following: Deferred Front End Loads (quot;DFELquot;) - capitalization and amortization of DFEL is reported as a component of expense * assessments revenue. Depending on the segment, these had previously been reported as a component of either other revenue, benefits expense or DAC amortization. Investment Management Advisory Fees and General and Administrative Expenses - certain reclassifications have been * made between revenue and expenses for such items as distribution fees and management fee waivers to conform to current industry practices. Commissions and general & administrative expenses - we reclassified certain distribution expenses to commissions which * had previously been reported in general & administrative expenses. This change impacted the Individual Markets Life segment and is also reflected in our consolidated presentation. We made several reclassifications within our Other Operations income statement to separately present intersegment * eliminations affecting revenues and expenses and we have also disclosed some additional line items. These changes were incorporated into all pages that reference Other Operations.
  5. 5. 12/31/2006 PAGE 1 Financial Highlights Unaudited [Millions of Dollars, except Common Share Data] For the Quarter Ended December 31 For the Year Ended December 31 2005 2005 2006 2006 Amount Change % Change Amount Change % Change Amount Amount Income from Operations - By Segment Individual Life Insurance 157.4 $ 73.8 $ 83.6 113.3% 496.3 $ 259.5 $ 236.8 91.3% $ $ Individual Annuities 70.9 52.9 74.6% 252.0 156.5 62.1% 123.8 408.5 Individual Markets 144.7 136.4 94.3% 511.5 393.2 76.9% 281.1 904.7 Defined Contribution 45.2 (0.6) -1.3% 187.1 16.7 8.9% 44.6 203.8 Executive Benefits 9.5 3.2 33.7% 19.6 29.6 151.0% 12.7 49.2 Group Protection - 33.2 NM - 99.0 NM 33.2 99.0 Employer Markets 54.7 35.8 65.4% 206.7 145.3 70.3% 90.5 352.0 Investment Management 8.9 5.5 61.8% 16.8 38.3 228.0% 14.4 55.1 Lincoln UK 13.6 (3.7) -27.2% 43.3 (4.4) -10.2% 9.9 38.9 Lincoln Financial Media - 17.5 NM - 44.0 NM 17.5 44.0 Other Operations 9.6 (48.0) NM 54.3 (130.1) NM (38.4) (75.8) Total Income from Operations (1) 231.4 143.8 62.1% 832.7 486.3 58.4% 375.2 1,319.0 0.0 0.0 Realized gains (losses) (6.1) 15.5 254.1% (14.6) 12.0 82.2% 9.4 (2.6) Net gain (loss) on reinsurance derivative/trading account securities - 0.1 NM 3.0 (1.0) -33.3% 0.1 2.0 Gain on sale of subsidiaries/ businesses - - NM 9.3 (9.3) -100.0% - - Reserve development/ amortization of related deferred gain 0.2 - - 0.8 0.1 12.5% 0.2 0.9 Loss on early retirement of subordinated debt - (3.6) NM - (3.6) NM (3.6) (3.6) Net Income 381.3 $ 225.4 $ 155.9 69.2% 1,315.6 $ 831.1 $ 484.5 58.3% $ $ 0.0 0.1 0.0 0.1 Earnings per share (diluted) Income from Operations (1) $ 1.31 $ 0.03 2.3% 5.14 $ 4.73 $ 0.41 8.7% $ 1.34 $ Realized losses (0.03) 0.06 200.0% (0.08) 0.07 87.5% 0.03 (0.01) Net gain (loss) on reinsurance derivative/trading account securities - - NM 0.02 (0.01) -50.0% - 0.01 Gain on sale of subsidiaries/ businesses - - NM 0.05 (0.05) -100.0% - - Reserve development/ amortization of related deferred gain - - NM - - NM - - Loss on early retirement of subordinated debt - (0.01) NM - (0.01) NM (0.01) (0.01) Net Income 1.36 $ 1.28 $ 0.08 6.3% 5.13 $ 4.72 $ 0.41 8.7% $ $ - - - - Operating Revenue- By Segment Individual Life Insurance 958.4 $ 501.1 $ 457.3 91.3% 3,255.8 $ 1,910.6 $ 1,345.2 70.4% $ $ Individual Annuities 372.1 265.2 71.3% 1,422.5 738.8 51.9% 637.3 2,161.3 Individual Markets 873.2 722.5 82.7% 3,333.1 2,084.0 62.5% 1,595.7 5,417.1 Defined Contribution 241.2 3.8 1.6% 947.5 40.5 4.3% 245.0 988.0 Executive Benefits 61.6 47.5 77.1% 227.4 144.4 63.5% 109.1 371.8 Group Protection - 344.8 NM - 1,031.8 NM 344.8 1,031.8 Employer Markets 302.8 396.1 130.8% 1,174.9 1,216.7 103.6% 698.9 2,391.6 Investment Management 127.9 21.0 16.4% 475.3 88.2 18.6% 148.9 563.5 Lincoln UK 62.6 22.2 35.5% 318.4 (10.4) -3.3% 84.8 308.0 Lincoln Financial Media - 70.2 NM - 187.8 NM 70.2 187.8 Other Operations 28.9 16.7 57.8% 175.2 21.2 12.1% 45.6 196.4 Total Operating Revenue 1,395.4 1,248.8 89.5% 5,476.8 3,587.5 65.5% 2,644.2 9,064.3 (0.1) - - - Realized losses (9.3) 22.1 237.6% (22.1) 15.4 69.7% 12.8 (6.7) Gain (loss) on reinsurance derivative/trading account securities - 1.2 NM 4.6 (0.5) -10.9% 1.2 4.1 Gain on sale of subsidiaries/ businesses - - NM 14.2 (14.2) -100.0% - - Amortization of deferred gain-reserve development 0.3 - - 1.2 0.1 8.3% 0.3 1.3 Total Revenue $ 1,386.4 $ 1,272.0 91.7% 9,062.9 $ 5,474.8 $ 3,588.1 65.5% $ 2,658.4 $ 0.0 0.0 (1) Income from operations includes after-tax restructuring charges of $2.1 million, or 1 cent per share, and $1.1 million, or 1 cent per share, for the quarters ended December 31, 2006 and 2005, respectively, and $9.3 million, or 4 cents per share, and $19.0 million, or 11 cents per share, for the full year ended December 31, 2006 and 2005, respectively. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
  6. 6. 12/31/2006 PAGE 2 Financial Highlights Unaudited [in Billions] Operational Data by Segment For the Quarter Ended December 31 For the Year Ended December 31 2005 2005 2006 2006 Amount Change % Change Amount Change % Change Amount Amount Individual Markets Individual Annuities Gross deposits $ 1.999 $ 1.161 58.1% $ 7.526 $ 3.230 42.9% $ 3.161 $ 10.756 Net flows 0.767 0.125 16.3% 2.876 (0.211) -7.3% 0.892 2.665 Account values (gross) 48.495 18.219 37.6% 48.495 18.219 37.6% 66.714 66.714 Account values (net of reinsurance) 46.262 18.640 40.3% 46.262 18.640 40.3% 64.902 64.902 Individual Life Insurance Sales (in millions) (1) 90.7 127.4 140.5% 303.2 267.6 88.3% 218.1 570.8 Life insurance in-force 316.641 184.736 58.3% 316.641 184.736 58.3% 501.376 501.376 Account values 14.051 12.439 88.5% 14.051 12.439 88.5% 26.490 26.490 Employer Markets Defined Contribution (2) Gross deposits $ 1.078 $ 0.021 1.9% $ 4.403 $ 0.182 4.1% $ 1.099 $ 4.585 Net flows (0.026) 0.036 138.5% 0.419 (0.078) -18.6% 0.010 0.342 Account values - annuities 26.701 1.781 6.7% 26.701 1.781 6.7% 28.482 28.482 Alliance Mutual Funds 3.772 1.403 37.2% 3.772 1.403 37.2% 5.175 5.175 Account values including Alliance Mutual Funds 30.473 3.184 10.4% 30.473 3.184 10.4% 33.656 33.656 Executive Benefits COLI/BOLI sales (in millions) 11.1 21.4 192.8% 49.8 33.1 66.5% 32.5 82.9 Life insurance in-force 7.729 7.917 102.4% 7.729 7.917 102.4% 15.645 15.645 Account values 1.318 2.987 226.6% 1.318 2.987 226.6% 4.305 4.305 Group Protection Annualized sales (in millions) - 113.1 NM - 208.7 NM 113.1 208.7 Loss ratio (3) - NM NM - NM NM 69.1% 67.4% Investment Management Segment Retail deposits 3.192 $ 3.629 $ (0.437) -12.0% $ 15.101 $ (2.110) -14.0% $ $ 12.991 Retail net flows 1.148 (1.288) NM 6.442 (5.255) -81.6% (0.140) 1.187 Institutional in-flows 4.833 0.055 1.1% 16.302 (1.200) -7.4% 4.888 15.102 Institutional net flows 1.733 0.934 53.9% 8.778 (0.787) -9.0% 2.666 7.991 Total Deposits and In-flows 8.462 (0.382) -4.5% 31.403 (3.310) -10.5% 8.080 28.093 Total Net Flows 2.881 (0.354) -12.3% 15.220 (6.043) -39.7% 2.526 9.177 Assets Under Management- Retail and Institutional 77.633 19.674 25.3% 77.633 19.674 25.3% 97.307 97.307 Assets Under Management - General Account 43.086 23.981 55.7% 43.086 23.981 55.7% 67.066 67.066 Assets Under Management - Total Segment 120.719 43.654 36.2% 120.719 43.654 36.2% 164.373 164.373 Consolidated Domestic Retail Deposits $ 6.737 $ 1.068 15.9% $ 26.835 $ 2.225 8.3% $ 7.805 $ 29.060 Domestic Retail Account Balances 121.858 43.428 35.6% 121.858 43.428 35.6% 165.287 165.287 Domestic Retail Net Flows 2.354 (0.964) -41.0% 11.144 (4.878) -43.8% 1.390 6.266 Domestic Deposits 11.305 1.279 11.3% 42.107 1.121 2.7% 12.584 43.229 Domestic Net Flows 4.285 (0.160) -3.7% 20.045 (5.666) -28.3% 4.125 14.378 Assets Under Management 171.755 61.768 36.0% 171.755 61.768 36.0% 233.523 233.523 (1) Sales for Individual Life Insurance consist of first year commissionable premium for Universal life (quot;ULquot;), including Moneyguard, and COLI plus 5% of excess premium received, including UL internal replacements, and first year paid premiums for Whole life and Term products (2) Includes deposits for Alliance Mutual Funds which are not included in separate account liabilities on our balance sheet. (3) Represents combined loss ratio for Life, Disability and Dental business. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
  7. 7. 12/31/2006 PAGE 3 Financial Highlights Unaudited [Millions of Dollars, except Common Share Data] For the Quarter Ended December 31 For the Year Ended December 31 2005 2005 2006 2006 Amount Change % Change Amount Change % Change Amount Amount Balance Sheet Assets - End of Period $ 124,859.6 $ 53,634.2 43.0% $ 124,859.6 $ 53,634.2 43.0% $ 178,493.7 $ 178,493.7 Shareholders' Equity Beg of period (including AOCI) $ 6,284.4 $ 5,758.7 $ 6,175.6 $ 208.8 $ 12,043.2 $ 6,384.4 End of period (including AOCI) 6,384.4 5,816.6 6,384.4 5,816.6 12,201.0 12,201.0 End of period (excluding AOCI) 5,856.6 5,731.3 5,856.6 5,731.3 11,587.9 11,587.9 Average equity (excluding AOCI) 5,760.0 5,751.9 5,507.1 4,546.9 11,512.0 10,054.0 Return on Equity Net income/average equity (excluding AOCI) 15.7% 15.1% 13.2% 13.1% Inc from operations/average equity (excluding AOCI) 16.1% 15.1% 13.0% 13.1% Return on Capital Inc from operations/average capital 13.6% 12.6% 10.6% 10.7% Common Stock Outstanding Average for the period - diluted 176.6 103.8 58.8% 176.1 80.0 45.4% 280.4 256.2 End of period - assuming conv of preferreds 174.0 101.9 58.6% 174.0 101.9 58.6% 276.0 276.0 End of period - diluted 176.9 103.3 58.4% 176.9 103.3 58.4% 280.2 280.2 Book value (including AOCI) $ 36.69 $ 7.52 20.5% $ 36.69 $ 7.52 20.5% $ 44.21 $ 44.21 Book value (excluding AOCI) $ 33.66 $ 8.34 24.8% $ 33.66 $ 8.34 24.8% $ 41.99 $ 41.99 Cash Returned to Shareholders Share repurchase - dollar amount 150.0 $ - $ 150.0 $ 103.6 $ 898.9 $ $ 1,002.5 Dividends declared to shareholders 66.6 42.3 257.7 170.8 108.9 428.6 Total Cash Returned to Shareholders $ 258.9 $ 66.6 $ 192.3 $ 1,431.1 $ 361.3 $ 1,069.8 Share repurchase - number of shares - 2.504 2.331 14.546 2.504 16.877 Dividend declared on common stock - per share 0.395 $ 0.380 $ 0.015 3.9% 1.535 $ 1.475 $ 0.060 4.1% $ $ Dividend payout ratio (1) 29.7% 31.3% 29.0% 29.9% Annualized yield (2) 2.9% 2.8% 2.4% 2.3% Comprehensive Income (Loss) Net income 381.3 $ 225.4 1,315.6 $ 831.1 $ $ Net unrealized gains (losses) on securities (72.4) (326.3) (8.4) (27.0) Gains (losses) on derivatives (1.5) (6.7) 6.5 55.1 Foreign currency translation (16.1) (70.9) 28.7 81.7 Minimum pension liability adjustment (2.9) 1.0 63.2 59.5 Adjustment to initially apply SFAS 158 (4) - - (84.0) (84.0) Comprehensive Income $ 387.3 $ 132.4 $ 1,400.9 $ 428.2 Ratios: Debt to total capitalization (3) 19.9% 19.9% 21.1% 21.1% Debt to equity (3) 24.8% 24.8% 26.7% 26.7% Ratings as of February 5, 2007: A.M. Best Fitch Moody's Standard & Poors Senior Debt Ratings: a A A3 A+ Financial Strength Ratings: Lincoln National Life Insurance Company A+ AA Aa3 AA First Penn-Pacific Life Insurance Company A+ AA A1 AA- Lincoln Life & Annuity Company of New York A+ AA Aa3 AA Jefferson-Pilot Life Insurance Company A+ AA Aa3 AA Jefferson Pilot Financial Insurance Company A+ AA Aa3 AA Jefferson Pilot LifeAmerica Insurance Company A+ AA N/R AA [1] Indicated dividend divided by net income [2] Indicated dividend divided by the closing price [3] Equity used in calculation excludes accumulated other comprehensive income (loss). Capital securities are considered 25% debt and 75% equity. The calculation for the second quarter of 2006 includes adjustments to beginning equity for stock issued in connection with the April 3, 2006 merger with Jefferson-Pilot Corporation (quot;JPquot;) and the accelerated stock repurchase transaction. (4) SFAS 158 was adopted effective December 31, 2006 which requires the disclosure of the funded status of our pension and post-retirement benefit plans on the balance sheet. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
  8. 8. 12/31/2006 PAGE 4 (1) Combined Production Data Unaudited [in Billions] Three Months Ended Year Ended Dec. March June Sept. % Dec. % Dec. Dec. 2005 2006 2006 2006 Change 2005 Change 2006 2006 Individual Markets Individual Life Insurance Sales by Product (millions) Universal Life Excluding MoneyGuard $ 117.2 $ 83.4 $ 97.5 $ 119.9 51.5% $ 422.8 13.1% $ 177.6 $ 478.3 MoneyGuard 9.4 7.7 7.5 8.3 -17.0% 33.9 -7.7% 7.8 31.3 Total 126.5 91.1 105.0 128.2 46.6% 456.7 11.6% 185.4 509.6 Variable universal life 20.6 16.4 15.7 13.0 7.3% 70.4 -4.5% 22.1 67.2 Whole life 0.9 1.2 0.4 0.7 -33.3% 3.8 -23.7% 0.6 2.9 Term 10.7 11.2 11.3 10.7 -6.5% 41.4 4.1% 10.0 43.1 Total Sales by Product $ 158.7 $ 120.0 $ 132.3 $ 152.5 37.4% $ 572.3 8.8% $ 218.1 $ 622.9 $ - Individual Annuity Deposits Fixed $ 0.567 $ 0.560 $ 0.644 $ 0.818 50.8% $ 2.345 22.7% $ 0.855 $ 2.878 Variable 1.533 1.666 1.867 1.658 34.4% 5.596 29.6% 2.061 7.252 Indexed annuities 0.178 0.173 0.228 0.244 37.6% 0.788 12.9% 0.245 0.890 Total Individual Annuities $ 2.278 $ 2.399 $ 2.739 $ 2.720 38.8% $ 8.728 26.2% $ 3.161 $ 11.018 $ - Employer Markets Defined Contribution Fixed $ 0.240 $ 0.253 $ 0.242 $ 0.268 -23.8% $ 1.083 -12.7% $ 0.183 $ 0.946 Variable 0.616 0.669 0.714 0.583 -9.3% 2.254 12.0% 0.559 2.525 0.856 0.923 0.955 0.851 -13.3% 3.337 4.0% 0.742 3.471 Alliance Mutual Funds Deposits 0.223 0.318 0.204 0.235 60.1% 1.066 4.4% 0.357 1.113 Total Annuity and Alliance Mutual Funds $ 1.078 $ 1.241 $ 1.159 $ 1.086 1.9% $ 4.403 4.1% $ 1.099 $ 4.585 Executive Benefits COLI/BOLI sales (millions) $ 12.7 $ 17.5 $ 17.2 $ 16.3 155.9% $ 52.4 59.4% $ 32.5 $ 83.5 Group Protection Annualized Sales (millions) Life $ 29.4 $ 23.6 $ 15.3 $ 19.4 46.6% $ 86.7 17.0% $ 43.1 $ 101.4 Disability 44.5 34.2 22.9 24.7 27.9% 141.0 -1.6% 56.9 138.7 Dental 6.9 6.2 7.1 6.1 89.9% 33.7 -3.3% 13.1 32.6 Investment Management Sales and Inflows Retail Annuities $ 0.713 $ 0.885 $ 0.869 $ 0.960 30.7% $ 2.768 31.8% $ 0.932 $ 3.647 Mutual funds 1.657 1.329 1.370 1.151 6.7% 5.994 -6.3% 1.768 5.617 Managed accounts & other 1.260 1.806 1.043 0.386 -60.9% 6.339 -41.2% 0.493 3.728 3.629 4.019 3.282 2.497 -12.0% 15.101 -14.0% 3.192 12.991 4.833 5.044 2.764 2.406 1.1% 16.302 -7.4% Institutional 4.888 15.102 Total Sales and Inflows -4.5% $ 31.403 -10.5% $ 8.462 $ 9.063 $ 6.046 $ 4.904 $ 8.080 $ 28.093 Total Annuity & Alliance Mutual Fund Deposits Fixed Annuities Individual $ 0.745 $ 0.733 $ 0.872 $ 1.062 47.7% $ 3.133 20.2% $ 1.100 $ 3.767 Employer Markets 0.240 0.253 0.242 0.268 -23.8% 1.083 -12.7% 0.183 0.946 0.985 0.986 1.114 1.330 30.3% 4.215 11.8% 1.283 4.713 Variable Annuities Individual 1.533 1.666 1.867 1.658 34.4% 5.596 29.6% 2.061 7.252 Employer Markets 0.616 0.669 0.714 0.583 -9.3% 2.254 12.0% 0.559 2.525 2.148 2.335 2.581 2.241 21.9% 7.850 24.5% 2.619 9.777 Total Annuities 3.134 3.322 3.695 3.571 24.5% 12.065 20.1% 3.903 14.491 Alliance Mutual Funds 0.223 0.318 0.204 0.235 60.1% 1.066 4.4% 0.357 1.113 Total Annuity and Alliance Mutual Funds $ 3.356 $ 3.640 $ 3.898 $ 3.806 26.9% $ 13.131 18.8% $ 4.259 $ 15.604 (1) This schedule combines the previously reported data for LNC and JP and does not reflect any adjustments that may have resulted had the April 4, 2006 merger been completed prior to the periods presented. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.
  9. 9. 12/31/2006 PAGE 5 Consolidated Expense Detail Unaudited (In Millions) Three Months Ended Year Ended Dec. March June Sept. % Dec. % Dec. Dec. 2005 2006 2006 2006 Change 2005 Change 2006 2006 $ 216.4 $ 212.9 $ 362.0 $ 382.6 114.7% $ 790.3 80.0% Commissions $ 464.7 $ 1,422.2 General and administrative expenses: General and administrative expenses 313.7 287.7 374.1 400.6 38.5% 1,250.8 19.7% 434.4 1,496.8 Merger-related expenses - - 7.4 12.1 NM - NM 15.8 35.3 Total general and administrative expenses 313.7 287.7 381.5 412.7 43.5% 1,250.8 22.5% excluding Broker/Dealer 450.2 1,532.1 Restructuring charges 1.5 0.3 9.6 1.0 120.0% 29.3 -51.5% 3.3 14.2 Taxes, licenses and fees 17.3 33.5 47.3 50.3 177.5% 95.5 87.6% 48.0 179.2 Interest (1) 21.8 21.7 65.0 67.3 222.9% 87.2 157.3% 70.4 224.4 570.7 556.1 865.4 914.0 81.6% 2,253.0 49.7% Total commissions and expenses incurred 1,036.6 3,372.1 -96.9% (937.6) -68.4% Less: commissions and expenses capitalized (263.0) (244.5) (391.6) (424.3) (517.9) (1,578.5) Amortization: DAC/VOBA Amortization 144.8 165.0 222.2 225.9 92.3% 540.7 64.9% 278.5 891.7 Amortization of intangibles 2.0 2.0 6.6 3.1 120.0% 7.8 105.1% 4.4 16.0 146.8 167.0 228.7 229.0 92.6% 548.5 65.5% Total amortization 282.8 907.5 54.2 46.6 79.3 76.6 47.6% 204.3 38.3% Broker/Dealer commissions and G&A 80.0 282.5 $ 508.8 $ 525.1 $ 781.9 $ 795.3 73.3% $ 2,068.1 44.3% Total $ 881.5 $ 2,983.8 (0.0) 0.0 (0.0) 0.1 - (0.1) Merger-related expenses: (2) Severance and employee-related charges $ - $ - $ 12.8 $ 8.4 NM $ - NM $ 6.2 $ 27.4 Systems integration and related expenses - - 0.8 1.5 NM - NM 5.4 7.7 Other expenses - - 3.1 3.2 NM - NM 7.5 13.8 $ - $ - $ 16.7 $ 13.1 NM $ - NM Total merger-related expenses $ 19.1 $ 48.9 Note: The Consolidated Expense Detail data is presented on a GAAP basis. (1) Interest expense for the fourth quarter and full year 2006 includes $5.6 million related to losses on early extinguishment of debt. (2) Represents merger-related expenses included in general and administrative expenses and restructuring charges. This is a dated document. It may not be accurate after such date and LNC does not undertake to update or keep it accurate after such date.

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